RICHMOND -- Best Products Co. Inc., a national chain of catalogue showrooms and jewelry stores, has suspended payments to vendors and is negotiating to restructure long-term debts, the company's president said.
Stewart M. Kasen, who spent part of last week in New York talking to lenders, said the company is trying to avoid seeking protection under federal bankruptcy laws. "Whenever you talk about a restructuring, it's always with the backdrop of the possibility of a filing," Kasen said. He said the lenders "are understanding. They recognize the economic climate that we're in."
Best Products has recorded annual losses since it was acquired by Adler & Shaykin in a 1988 leveraged buyout. The $1.1 billion buyout saddled the company with huge debt payments at a time when industry sales were lackluster.
Best reported annual sales last year of about $2.1 billion. It operates 195 catalogue showrooms and 35 Best Jewelry stores in 27 states.
In the first six months of this year, Best had a nearly $60 million loss.
Like other retailers, Best earns most of its sales during the Christmas season. But sales for the first few days after Thanksgiving, the traditional kick-off for holiday shopping, were 30 percent below last year's.
"We are working with the company in restructuring the debt," said Henry N. Chan, an executive with Manufacturers Hanover Trust Co. in New York, which provided New York investors Adler & Shaykin with $622 million of the financing for the buyout.
"We've met with all the lenders a number of times," Chan said Friday. He said the renegotiation began in earnest within the past month.
Anthony R. Munson, an executive with Sunbeam Corp., said Best Products missed a payment that was due Dec. 10. Upon hearing that the Richmond company has suspended payments to all vendors, he said, "It doesn't come as a total surprise."
Munson said Sunbeam will not ship Best any merchandise until the debt problems are worked out and that he expected other vendors to hold shipments until there is a resolution.
But Leonard Shaykin, managing partner of Adler & Shaykin, said in Friday's Wall Street Journal that vendors are still shipping to Best.
According to the Journal, Best listed $664.8 million in long-term debt on a financial balance sheet dated Aug. 4.